Tuesday tips round-up: Centamin, London Mining

25th Mar 2014 06:35

Centamin´s share price has avoided the rout seen in other goldminers since the start of last year, thanks to the fact that it has the lowest cost of production. However, it continues to faces the legal challenge against its ownership rights over its sole producing asset, the Sukari mine in Egypt. The latest ruling is due today, but another adjournment is likely, despite the fact that it has been dragging on for 18 months now. On a more positive note, the phase of heavy capital spending at Sukari is now over. The firm is also developing assets in Ethiopa, Burkina Faso and Ivory Coast, but they are a long way from producing. Also worth taking into account, the firm is expected to confirm its dividend policy at some point over the coming year, with analysts expecting a payment in 2015 for a yield of about 4%. However, "that legal uncertainty will probably continue to hold them back, I suspect", says The Times´s Tempus. Shares of London Mining are bombed out, trading at only three times´ forecast earnings. That comes as iron ore prices have slid and the company´s production was hit after floods and production delays. The Sierra Leone-based miner thus missed production targets last year. For 2014 it sees production rising to 5.4m wet metric tonnes (wmt) from 3.2m wmt. As well, the company managed to reverse the prior year´s losses, turning an operating profit of $22.6m over 2013. However, the price of iron ore might not remain stable and to fund its recent expansion it took on a large amount of debt. Following a renegotiation by its lenders, its interest costs look set to rise. "It is always painful to realise a loss, but most of the time it is wise to cut and run - sell", says The Daily Telegraph´s Questor column. Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB